nep-pke New Economics Papers
on Post Keynesian Economics
Issue of 2011‒07‒02
nine papers chosen by
Karl Petrick
University of the West Indies

  2. Work Sharing: The Quick Route Back to Full Employment By Dean Baker
  3. Heterodox surplus approach: production, prices, and value theory By Lee, Frederic
  4. Crowding out capitalism: A law of historical materialism By Hagendorf, Klaus
  5. Beyond the market-institutions dichotomy: The institutionalism of Douglass C. North in response to Karl Polanyi's challenge By Claude Didry; Caroline Vincensini
  6. Pragmatism, Perspectival Realism, and Econometrics By Kevin D. Hoover
  7. The end of plantation? Coffee and land inequality in early twentieth century São Paulo By Colistete, Renato P.; Lamounier, Maria Lucia
  8. Successfully implementing major financial stability regulatory reforms: the risk weighting based controversy (Basel v Dodd Frank) and the role of national supervisors By Ojo, Marianne
  9. What Counts in US Politics: Voters or Interest Groups? By Abramowitz, Alan; Domhoff, William

  1. By: Giuseppe Mastromatteo (DISCE, Università Cattolica)
    Abstract: The paper examines Minsky’s reflections on policies designed to act as a countervailing force against crises by fostering “responsible” Big Government, in which the role of the State is profoundly revised and directed towards full and stable non-inflationary employment, and also enabled to sustain consumption and economic growth over time. The aim of this study is to assess the effectiveness of State-established structural direct job creation programs, enacted during severe recessions as a means of achieving full employment without disruptive consequences such as price instability, inefficiency of the public apparatus, unsustainable public and foreign debts. In-depth investigation of Minsky’s perspective highlights that well-focused full employment programs are important to counter inadequacy of effective demand; but if they are to be feasible and financially sustainable they must also improve the productivity of individuals and economic systems in the medium term.
    Keywords: crises, policies, Big Government, ELR programs.
    JEL: B22 E62 J68
    Date: 2011–06
  2. By: Dean Baker
    Abstract: This paper outlines a proposal for a system of work sharing that would give employers an incentive to maintain workers on their payroll at reduced hours as an alternative to laying them off. The system would be attached to the existing system of unemployment compensation, with shorttime compensation as an alternative to unemployment compensation. This means that work sharing would require no new government bureaucracy. In fact, 21 states (including California and New York) already have short-time compensation as an option under their unemployment insurance system. In these states a governmental structure already exists to support work sharing, although there would have to be changes to make the system more user friendly so as to increase take-up rates.
    Keywords: work sharing, unemployment, employment, recession, Germany, United States
    JEL: E E2 E24 E6 E66 H J J6 J65 J68
    Date: 2011–06
  3. By: Lee, Frederic
    Abstract: In this paper I argue that that there is a heterodox social surplus approach that has its own account of output-employment and prices, and its own value theory which draws upon various heterodox traditions. Starting with the Sraffian technical definition of the social surplus and then working with a Sraffa-Leontief input-output framework, the particular distinguishing feature of the heterodox approach is the role of agency in determining prices, the social surplus, and total social product and employment. Thus, in the first two sections, the heterodox model of the economy is delineated with respect to the social surplus and social provisioning, followed in the third and fourth sections with the development of a pricing model and a output-employment model and their structural-theoretical properties delineated. In the fifth section the results of the previous four sections are brought together to develop a model of the economy as a whole. The paper concludes with the delineation of the heterodox theory of value.
    Keywords: heterodox; theory of value; social surplus; social provisioning
    JEL: C67 E11 B5
    Date: 2011–06–24
  4. By: Hagendorf, Klaus
    Abstract: This paper presents a modern response to the problem imposed by Marx in Capital in 1867, “to lay bare the economic law of motion of modern society” and to provide a vision on how on the basis of this law of motion the transformation of the capitalist mode of production to the socialist mode of production can be perceived. The analysis begins with a discussion of the Marxian analysis of labour values. To overcome the difficulties the marginal analysis of labour values is introduced and it is shown that in an optimal economy where labour is used in an efficient manner commodities exchange by their labour values. The transformation problem is thereby eliminated. In a further step the socially necessary character of surplus value as a fund of capital accumulation in order to increase and maintain the productivity of labour is presented and opposed to the capitalists strife for the private exploitation of surplus value. It is argued that the capitalist harmful practices, leading to economic and social crisis, can and must be overcome by the labour movement via economic democracy and collective capital formation thereby eliminating the 'ultima ratio' of the capitalists, the supply of and control over capital. Finally this process of crowding out capitalism is contrasted with the orthodox reformist and revolutionary approaches.
    Keywords: Crowding out capitalism; Historical Materialism; labour theory of value; marginal analysis; Marxian economics; political economy; social revolution; Rosa Luxemburg; transformation problem
    JEL: B51 D46 P51 P16
    Date: 2011–06–21
  5. By: Claude Didry (IDHE - Institutions et Dynamiques Historiques de l'Economie - CNRS : UMR8533 - Université Panthéon-Sorbonne - Paris I - Université Paris VIII Vincennes-Saint Denis - Université de Paris X - Nanterre - École normale supérieure de Cachan - ENS Cachan); Caroline Vincensini (IDHE - Institutions et Dynamiques Historiques de l'Economie - CNRS : UMR8533 - Université Panthéon-Sorbonne - Paris I - Université Paris VIII Vincennes-Saint Denis - Université de Paris X - Nanterre - École normale supérieure de Cachan - ENS Cachan)
    Abstract: On the basis of the "challenge" North [1997 (1977)] identified in the works of Polanyi, we propose to outline the originality of North's institutionalism, especially in comparison with "new institutionalism" in economics as well as in sociology. Far from endorsing the dichotomy between market and non market dimensions of economic activities at the basis of the analyses of Williamson and Granovetter, North's definition of institutions as "rules of the game" allows him to conceive of institutions as the institutional foundations of the market and therefore as explanatory principles of historical dynamics.
    Keywords: institutions, institutionalism, North, Polanyi, Williamson, Granovetter
    Date: 2011–03–02
  6. By: Kevin D. Hoover
    Abstract: Econometricians tend to hold simultaneously two views in tension with each other: an apparent anti-realism that holds that all models are false and at best useful constructs or approximations to true models and an apparent realism that models are to be judged by their success at capturing an independent reality. This tension is resolved starting from Ronald Giere’s perspectival realism. Perspectival realism can itself be seen as a species of pragmatism, as that term is understood by its originator, Charles S. Peirce.
    Keywords: econometrics, realism, perspectival realism, perspectivism, pragmatism, models, Ronald Giere, Charles S. Peirce
    JEL: B40 B41 C10
    Date: 2010
  7. By: Colistete, Renato P.; Lamounier, Maria Lucia
    Abstract: This paper examines the concentration of land ownership in the leading coffee export region in the early twentieth century, the northeast area of the state of São Paulo, Brazil. Critics of the so-called plantationist perspective have rejected the classic view that large estates shaped colonial and nineteenth century Brazilian economy and society, arguing instead for a major role of small and medium-sized landholdings. We describe the size distribution of landholdings and estimate alternative measures of land concentration based on a detailed agricultural census of the state of São Paulo. We find that, despite variation across municipalities, large farms and latifundia controlled most of the productive resources in northeast São Paulo, resulting in high levels of inequality when compared to those of other agrarian societies in the past. These results contrast with the view of the critics of classic historiography and suggest that the large estate and high concentration of wealth were remarkable features at least in the most important coffee region in Brazil during the early twentieth century.
    Keywords: Land inequality; coffee plantations; Gini index; Generalized Entropy indexes; São Paulo; Brazil
    JEL: O18 Q15 O13 R14 N56
    Date: 2011–05–05
  8. By: Ojo, Marianne
    Abstract: As well as a consideration of the role contributed by national supervisors in the successful implementation and enforcement of standards, recommendations and regulations, the significance of clear and unambiguous mandates in enhancing communication between micro prudential supervisors (usually national financial supervisors and central banks) and macro prudential bodies which are responsible for writing the laws that are enforced by micro prudential supervisors, will be highlighted in this paper. This will incorporate a discussion on the advantages and disadvantages inherent in clear, explicit mandates – such a discussion necessitating a distinction between financial stability and monetary policy objectives. Furthermore, the role of credit ratings and their significance in influencing investor choices and judgments, will be considered as a means of highlighting how they contribute to the neglect of risks, exposures attributed to certain financial instruments, and ultimately, systemic risks which de stabilize the financial system.
    Keywords: European Systemic Risk Board; financial stability; credit ratings; Dodd Frank Act; Basel III; micro prudential supervision; risk weights; European Central Bank; counterparty risks; macro prudential arrangements; central banks; European Supervisory Authorities; monetary policy; risks
    JEL: D0 K2 E5 D8 E3
    Date: 2011–06–22
  9. By: Abramowitz, Alan; Domhoff, William
    Abstract: Alan Abramowitz trains his lens on the disappearing center in US politics. He surmises that the polarization in politics has long historical roots and has only increased under both the George W. Bush and Barack Obama Administrations. The divergence between parties is at historic highs according to Congressional vote tallies. It is largely due to ideological shifts to the right especially within the Republican Party. The Democratic Party is substantially the same but has lost the Southern wing of its support. The polarization is consistent among politicians, party activists, funders and the media. It reflects economic change, rising educational status, workforce composition and changes in the nature of families. He ends his talk by noting that the 2012 elections can be won by either party and this will have huge implications for public policy. William Domhoff considers the historic background of the two-party system in national politics. He maintains that it is important to understand US politics within power structures and to focus in on how voters are mobilized and demobilized by rival interest groups. He describes the two primary interest groups today as corporate conservative versus liberal labor admitting that this is an oversimplification. In particular, the Democratic Party has been a coalition of out-groups since its formation by Southern planters in a dynamic modernizing free labor economy. The Republicans were the party of in-groups from their formation as an Anglophile Protestant industrializing faction. He considers how these parties changed in social composition over time but were blown apart by the election of 1964 which has resulted in the polarizing alignments that have taken root today. He concludes his narrative with a discussion of the electoral system noting the near impossibility of an enduring third party.
    Keywords: American Politics, Political Science
    Date: 2011–03–07

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